The FCA is proposing changes to how people working in financial services are regulated. These changes are already effective in the banking industry and the aim is to roll out to the whole industry during the summer of 2018.  A Consultation Paper was issued in July providing all  regulated businesses the opportunity to review and provide responses by 3rd November. 

One of the biggest challenges regulated firms face with this process is that we are still in a consultation phase, and typically, once agreed, any changes are expected to be swiftly implemented with limited lead in time. 

Some of the key headlines to consider are –

  • Changes due to come into force across financial services in early 2018
  • There will be two levels of firms ‘Core’ and ‘Enhanced’.
  • Senior manager functions replace old approved persons functions with accountability for prescribed responsibilities
  • Roles that aren’t senior management but whose job can cause significant harm to customers will need to be certified on an annual basis
  • Where a firm outsources, the responsibilities under regulatory system may not be and must be assigned to Senior Managers.

What firms need to do under the Senior Managers Regime

If a person will be performing a Senior Management Function, the firm will need to do:

  • Satisfy themselves that the candidate is suitable, or ’fit and proper’, to carry out a Senior Management Function
  • Apply for that person to be approved by the FCA, before they take up their role
  • Send a Statement of Responsibilities as part of the application.

After a Senior Manager has been approved, the firm will need to:

  • Update and resubmit Statements of Responsibilities to us whenever there is a significant change to a Senior Manager’s responsibilities
  • Assess that all their Senior Managers are fit and proper to carry out their job at least once a year via fit and proper assessments
  • In addition, firms will need to make sure they have appropriately allocated all of the Prescribed Responsibilities to their Senior Managers, unless they are a Limited Scope Firm where Prescribed Responsibilities do not apply.

What Senior Managers need to do:

  • Anyone who is a Senior Manager will have a ‘duty of responsibility’. Senior Managers should understand what this means in the context of their job
  • Senior Managers must ensure that their Statements of Responsibilities are accurate and up to date
  • There are also Conduct Rules that will apply to Senior Managers. Senior Managers need to understand and comply with the Conduct Rules.

What We’re Doing

In preparation for the new regime, we have undertaken work on enhancing the role profiles of all team members and future new starters.  Role profiles now reflect the following 4 competencies –

  • Core
  • Administrative
  • People
  • Technical

Fulfilment of these competencies will be on an evidential basis through our QA model, and will feed into all training and competency measures. 

Each employee will be expected to evidence those competencies that are specific to their role; embracing  measurements on behaviours, communication, systems and legal knowledge. 

This work is already underway and we are committed to ensuring that the new regime is fully supported by our ability to evidence that every team member within the business is fit and proper to undertake their day to day responsibilities.

Glen Walker, Associate Director and Chief Compliance Officer